- Title: INDIA-GOLD Indians step up gold buying as global prices plummet
- Date: 23rd July 2015
- Summary: NEW DELHI, INDIA (JULY 23, 2015) (REUTERS) EXTERIOR OF SUNAR JEWEL HOUSE, LOCATED IN ONE OF DELHI'S LEADING JEWELLERY MARKETS, KAROL BAGH WOMEN WALKING PAST SHOP AN INTRICATELY DESIGNED GOLD NECKLACE IN DISPLAY WINDOW A CUSTOMER TRYING A RING ON HER FINGER CUSTOMER'S HAND AS SHE TRIES ON GOLD RING GOLD RING ON DISPLAY (SOUNDBITE) (Hindi) CUSTOMER AT A JEWELLERY SHOP, ISHA
- Embargoed: 7th August 2015 13:00
- Keywords:
- Location: India
- Country: India
- Topics: General
- Reuters ID: LVAG6E1VZK3ZNNLYS2ZAIQNTFTP
- Aspect Ratio: 16:9
- Story Text: Indians, for whom gold is often the investment of choice, are slowly stepping up their bullion purchases after prices fell to a five-year low earlier this week.
India and China are the world's top gold buyers, after massive selling on the Shanghai Gold Exchange on Monday (July 19) helped drive down gold prices by 4 percent, traders braced for a demand perk up in India, or elsewhere in Asia.
The last big slide in gold prices - a 13 percent drop in just two consecutive trading days in April 2013 - prompted weeks of long queues of Indians outside gold showrooms.
However, this time, India's gold appetite, which accounts for more than a fifth of global demand, is showing just modest gains.
Although gold edged up from the five-year low as the dollar weakened on Thursday (July 23), the modest gains suggest bearish investors are still hovering in the market after an early-week rout led to bullion's deepest loss in nearly two years.
Spot gold rose 0.4 percent to $1,097.54 an ounce by 0608 GMT, after sliding more than 1 percent to $1,086.89 on Wednesday (July 22), its cheapest since March 2010.
At two showrooms on Thursday at Karol Bagh, one of New Delhi's leading jewellery markets, the number of customers flowing in was steady but not overwhelming. Many of those who had made the journey were nevertheless convinced now to be the right time to buy.
"Earlier gold was very expensive, it was nearly 30,000 rupees (per 10 grams), but now it has come down to around 25,000 rupees, so there is a huge difference and it makes sense to buy now," said Isha Arora as she tried on a gold ring at Sunar Jewel House.
"Gold prices have come down, so I think that this is the right time to buy. I have come to buy gold as an investment for the future," said Manjula Verma, a customer at Khanna Jewellers, though adding that she was prepared to buy more if a further dip in prices came along.
Morgan Stanley estimates Indian households own, directly or indirectly, around $1 trillion in gold, about the same as in bank fixed deposits, and against just $400 billion in shares - though low-cost stockbrokers are looking to use a 42 percent drop in gold prices over the past four years to lure investors into buying more shares.
India spent a record $15.2 billion on gold imports in April-May 2013, with gold bars selling locally for more than $20 an ounce above the global spot price. That premium is now just around $1 an ounce.
On Monday, as the gold price dropped to $1,088.05 an ounce, many Indian jewellers sent text messages to their clients encouraging them to buy gold, and offering to cut the cost of making it into jewellery in half.
The chief managing director of Sunar Jewel House, Praveen Goel, said their sales had surged following the price crash.
"Ever since the gold prices have fallen, there is an increase of nearly 20-25 percent in our business - it is only because of the gold prices that have come down," Goel said.
Vijay Khanna, the zonal chairman of All India Gems and Jewellery Trade Federation, said it was still difficult to predict whether the prices would settle in the short term.
"China has said (that it will sell), but how much gold will it sell? (Only when) the correct information comes out about how much it will offload (will we know where the prices are heading). Also, Greece has said that it will sell gold to improve its economy. How much gold will they sell? After that, how much of that gold will be consumed by the world? Once these things are clear, only then will the prices settle down," Khanna said.
Bullion prices generally have come under pressure from expectations of higher interest rates in the United States, which boosts the dollar and makes non-interest bearing assets such as gold less appealing.
China's appetite for gold, too, has waned after it also imported record volumes in 2013. Fast-rising stock prices, a slowing economy and Beijing's anti-corruption drive, which has deterred some from making conspicuous 'luxury' buys, have all diverted money away from bullion.
Greece, which has succeeded in securing a bail-out package, plans to offload its gold to meet a major demand of creditors as part of the economic reforms.
Some traders in India believe that if the gold prices come down to $1,000 levels, there would be a surge in buying. - Copyright Holder: REUTERS
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